Senior advisers to the two Miliband camps held a secret planning meeting at which they discussed what role each might play in the other's shadow cabinet when one of them loses the knife-edge battle to become Labour leader.

It is understood that Jim Murphy, one of David Miliband's two campaign managers, attended the meeting with members of the Ed Milband camp to map out how they would handle Saturday's dramatic leadership result.

David Miliband's campaign said they regarded the discussions as just exploring sensible precautions.

The Ed Miliband campaign took the willingness of his older brother's camp to discuss the consequences of defeat as a sign they are bracing for Ed seizing the leadership in the final lap.

The complex ballot papers are starting to be counted now with the result to be announced on Saturday afternoon.

Some senior shadow cabinet figures outside the two Miliband campaigns said they would be staggered if David Miliband was not shattered psychologically by defeat, should it happen, having long been tipped to win, but they revealed that he will nonetheless serve in the shadow cabinet. The source said: "The issue is whether in six months or a year he decides to consider a life outside Westminster."

Today Ed Balls came close to conceding defeat in the race, saying: "Gordon lost the election, and I was the person most associated with his leadership. Early on in the crucial first few months everyone was looking backwards to Brown, and saying it was time to move on.

"I hope the campaign has changed people's perceptions of me emotionally and politically. I feel liberated and that people no longer see me through the prism of Brown and Blair any longer … A lot of people have said to me: 'You have fought the best campaign, but this is a two-horse race.' It was very hard to break through that."

Andy Burnham called for a recasting of the rules for leadership elections, with tighter caps on campaign finances and a switch to one member one vote, so removing the separate sections for union political levy payers and MPs. "I do not see why my vote as an MP is worth 600 times the vote of an ordinary party member. That's not how we build a mass membership party," he said. Revealing that he had run up personal debts to fund his campaign, Burnham added: "The limits on campaign spending are ridiculously high."

He also criticised the way unions sent out literature backing Ed Miliband with the ballot papers. "In modern times people do not want ballots sent out by unions and wrapped in material promoting one candidate," he said. "It feels out of time."

There was widespread speculation yesterday about the new leader's appointment of a shadow chancellor, and what message that will send about whether Labour will do more to differentiate itself from the coalition by softening its pre-election commitment to halve the deficit in four years. Labour could shift its position before the 20 October spending review by promising to slow the pace of deficit reduction in face of signs of faltering world growth. The outgoing shadow chancellor, Alistair Darling, highlighted Ireland's return to recession yesterday as a sign that the coalition risked endangering the recovery in the UK.

Balls, the shadow children's secretary and a strong contender for the shadow chancellorship, insisted that his call to slow the Labour deficit programme "does not put me in a different place to either David or Ed Miliband". He said: "My Bloomberg speech [last month] has been praised by both Milibands and no one thinks we have to stick by the position adopted two years ago. The world has changed and moved on. The American downturn and the European crisis have changed things. I find it bizarre that Nick Clegg argues the crisis makes the case for cuts. It is nonsense and I think he has been very badly advised."